Is Bitcoin Retail Volume on the Verge of Growth? A Bullish Indicator?

According to on-chain data, interest from retail investors in using Bitcoin has stabilized and might soon start to increase again.

Bitcoin Retail Volume Stabilizes

As highlighted by an analyst in a CryptoQuant Quicktake post, there are signs that demand among retail investors could be on the verge of rising. The key metric here is "Retail Investor Demand," which looks at how much the smallest entities are using the Bitcoin network.

These investors typically hold minimal amounts, leading to smaller transactions. As a result, the Retail Investor Demand focuses on the total transaction volume of transfers under $10,000, providing insight into this demographic’s activity.

Here’s a chart presented by the quant, illustrating the 30-day percentage shift in Bitcoin Retail Investor Demand over the past few years:

The graph shows that earlier in the year, the 30-day change in Bitcoin Retail Investor Demand hit a significant low, signaling a sharp decline in activity among these small investors. However, since reaching this low point, the indicator has steadily moved upwards and is now nearing the 0% threshold, suggesting that the period of decline may be ending. If this trend continues, the metric might soon enter positive territory, indicating renewed interest from retail investors.

As seen from the chart, the last upswing in Retail Investor Demand occurred just before the rally last year that pushed Bitcoin beyond $100,000. During that period, transaction volumes from these investors continued to climb, eventually reaching a peak increase of around 30%, which interestingly coincided with a price high.

It’s not unusual that the asset saw consolidation when the growth in volumes linked to this group receded and activity dwindled.

During the 2021 bull run, Retail Investor Demand also dipped significantly into negative territory, akin to the recent trend earlier this year. The metric then experienced a robust reversal, surpassing the 0% mark and rising to a prominent green level, aligning with the start of the second half of the 2021 bull market.

The question now is whether retail volumes will make a similar recovery this time around, potentially signaling the start of another bullish phase for Bitcoin, or if the rebound might take longer.